The gap between average total cost and average variable cost:
A)is constant at all ranges of output.
B)is high at high levels of production.
C)declines as output expands.
D)depends on the production technology.

Question

Quizplus · Accepted Answer

The gap between average total cost (ATC) and average variable cost (AVC) declines as output expands because this gap represents average fixed cost (AFC), which decreases as output increases due to the spreading effect of fixed costs over a larger number of units.

The Gap Between Average Total Cost and Average Variable Cost